The economist Pablo Manzanelli, coordinator of the Research and Training Center of the Argentine Republic (Cifra-CTA), proposed this Saturday that the State launch “a Vaca Muerta bond” with “a very significant guarantee, which is the natural resources themselves,” to thus create an alternative financial investment instrument to the purchase of the illegal dollar that “solves what Argentina needs, such as reducing energy imports.”
Manzanelli, Master in Political Economy, assured in statements to AM530 radio that “The very complex situation” that the country is going through requires doing “a fine task” that includes “heterodox measures” such as launching a bond linked to the exploitation of Vaca Muerta“no one doubts that it will be successful”, to offer the “grain exporter what to do with the pesos” once he settles, because – he warned – “if everything is not paralleled and we have the exchange runs”.
The researcher from Flacso and the University of Quilmes (UNQ) also stated that the creation of a bond that offers “guarantees to investors”, as it is tied to the development of the unconventional oil and gas basin, would help to “liquify a little the excess of pesos that are in the economy and that do not find productive investment”.
As for the crossroads of a situation crossed by “very high inflation”, he reiterated that the economic reality forces to implement a “fine task” that he described as the need to “recalibrate salaries, rates and others, but at the same time controlling prices”which implies “configuring a new structure of relative prices and proposing a freeze to sustain it,” he explained.
Regarding the call for a potential agreement on prices and wages for 60 days, Manzanelli proposed that this initiative go hand in hand with the formal implementation “of a new system of multiple exchange rates, which allows the entry of dollars and is subordinated to an industrial development policy.
When describing the current economic situation, he considered that “a macro solution of fiscal adjustment would not solve current problems” because although it could “reduce exchange rate pressures” on the other hand it would deepen the problem to the “salary crisis”, with the risk of generate “an adjustment with economic stagnation, crisis and increase in unemployment”, with which the “destabilization would cease to be in the Central Bank and in the dollars to be in the street”.
In that line, insisted that before starting “the truce of prices and wages” they should “recalibrate different variables” of the economy, for which he called for updating wages through “a general increase by decree” through a fixed sum that benefits even to workers who earn more than 150,000 pesos.
In terms of income, Manzanelli valued the recent update of pensions with the mobility of 15.53% plus the reinforcement of 7,000 pesos, an announcement that “is not a small thing” because, he argued, the bonuses are applied during “the months necessary until the next increase arrives”, which will allow the retiree not to nominally lower his or her income in the face of inflation.
Regarding the new mode of segmentation of electricity and gas subsidies, he said he agreed with the criterion of “putting a limit on subsidized consumption” but warned that “the rate increase that has been considered is a little higher than that would lead to the goal of sustainability from a revenue point of view.
“The fact of going over the high-income sectors seems fine to me conceptually, although it is necessary to see how it is achieved from the technical point of view so that later retirees or low-income sectors do not appear paying rates that are impossible for them”he stated.
After mentioning that new, more “limited” and “conscious” practices in the use of electricity and gas are being proposed throughout the world, he maintained that “Argentina does not have to be an island in that sense” and even advised the authorities “why not think about scheduled outages”.
In monetary matters, Manzanelli maintained that in the face of “such a strong exchange rate run,” an expected reaction is “to raise the interest rate, as in fact the Central Bank has just done,” but added that in situations like these, “the economic unsustainability” and “the participation of those who move the dollar ammeter in Argentina, who have veto power”.
